Why Technology One Crashed 7.54% Today

 Technology One Limited’s [ASX:TNE] share price is trading 7.54% lower today, wiping out about half the gains it has made in the past three months. TNE opened trading today well below its previous close of $5.90. Currently, shares are $5.45 apiece.

Technology One Limited (TNE) is a software provider and consultant, servicing government, local government, financial services, health and community services, education, and utilities and managed services markets. Products include financials, HR and Payroll, supply chain and business intelligence.

What caused the crash?

While TNE has yet to file a change of director’s interests notice, the company’s management team are reportedly offloading a considerable chunk of their shares.

The report comes for the Australian Financial Review (AFR), which explains that UBS was searching for buyers for $44 million worth of shares discounted at $5.55. However, there was a significant lift in volume yesterday with over 9.9 million shares changing hands. This compares to the monthly average of 900,000 shares.

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Interestingly, the sell off comes just after the company announced its ninth consecutive year of growth, setting a record net profit of $51 million.

What comes next for Technology One?

Despite the company posting solid performance this financial year and continuing a strong bout of growth, investors are unlikely to take insider selling well.

To give you an example, Kogan.com Limited [ASX:KGN] CEO has sold around 6.25 million shares for an average price of $6.41 since the beginning of September. Its current share price stands at $2.83. A massive drop in performance.

However, we are yet to hear from the company and if management have been selling off, they’ll likely offer a tolerable explanation as to why.

The TNE sell off comes just days after CEO, Edward Chung announced his vision to accelerate the company’s growth beyond the pace of doubling revenue and profit every four to five years. Technology One posted a 15% jump in net profit before tax to $66.5 million, while after-tax profits also climbed 15% to $51 million, for the year to 30 September.

With the company’s stock rising more than 20% this year and its enterprise resource planning software now deployed to over 1200 customers, shareholders could be forgiven for thinking the share price should be moving in the other direction.


Ryan Clarkson-Ledward,
For Money Morning

PS: It can be hard to see moments like these coming until it’s too late! If you want to learn how to better protect yourself and improve your technical analysis check out this Free Guide: Everything you need to know about technical analysis for optimal investing. Get started today.

Ryan Clarkson-Ledward is an Editor at Money Morning.

Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects.

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